eXp Realty Luxury
Casa Lenta · Broker Opinion of Value

364 Pacific Avenue

Solana Beach, California · West of the 101

Keep, Sell or Exchange: A Strategy for 364 Pacific · Prepared for Kristie Nova · Casa Lenta LLC · October 2026
$4.90M+ most probable valueRange $4.75M – $5.10M
List early February at $4,995,000Just under the $5M search break
~20% return on 364~$800K gross gain on $4.1M invested
Next project: $1M+ profitAcquired before summer 2027
Kip Boatcher, Broker Associate · eXp Realty · DRE #01322805Always Bringing You Home.
A note from Kip

Kristie,

Last week, when we talked through the best paths forward for Casa Lenta, I felt the most useful thing I could do was lay out the three viable options for this asset side by side: keep it, sell it as-is, or refresh it and then sell. A decision this size deserves more than a gut call, so I ran each path through the numbers: the rental income the home has actually earned, every sale west of the 101 since 2020, the renovation math, and the tax rules that shape a 1031 exchange.

364 Pacific is a beautiful property, and it has proven to be a great investment over the last five years. Your enhancements, and the lifestyle experience we've built around them for your guests, are why it has been one of the top-rated vacation rentals in Solana Beach. Over the last several years, though, the vacation rental market has seen significant declines, and that has had a real impact on revenue. Combine that with a real estate market where appreciation has flattened, and there is truly one viable path forward. Roughly $5 million of value is earning close to nothing in cash. My recommendation is to list in early February, ahead of the spring rush, and exchange into a coastal property where your eye for renovation can create real value. That only works if we buy the right one, and I've spelled out exactly what "right" has to look like.

The sections that follow walk through every option, including the case for keeping it, so you can see the full picture. Take your time with it, and let's sit down this week and go through it together.

With Gratitude,

Kip Boatcher
The three options

Lock in your gain on 364 Pacific, then put it to work on a new project with $1 million+ profit potential

At $4.9 million, 364 Pacific returns about $800,000 on the $4.1 million you invested in acquisition and remodel, roughly 20%. Holding it from here earns under 3% a year. The same equity exchanged into the right coastal project is built to earn $1 million or more.

At a glance

~20%Gross return on the $4.1M invested in 364 Pacific, at a $4.9M sale.
2.7%What keeping it earns per year from here: 3% appreciation, less the rental shortfall.
$195KEstimated gross advantage of an early-February launch over listing now.
$1M+Profit target on the next project: e.g. $5M purchase + $1.5M renovation, resold at $8M+.

Returns are gross, before selling costs and taxes. This is a broker opinion of value, not an appraisal. Needs verification

Price explorer

Move the asking price and see what changes

$4.50MSupported by the dataStretchNot supported$5.60M
Price per sq ft
2025 pace (97.2% of ask)
2026 pace (93.6% of ask)
$5M search break
Gross gain over $4.1M invested
Costs of sale at ask (~6%)
Exchange proceeds at ask
vs. top non-oceanfront sale ($4.7M)

Pace outcomes apply the median sale-to-original-list ratios for this enclave in 2025 and 2026. Exchange proceeds are before loan payoff. Projections, not guarantees.

Opinion of value

Most probable value: $4.90 million and up

Indexing the 2021 sale forward at 3%–4.5% a year and adding the 2023 improvements gives $4.63M–$5.08M. Adjusted comparables point to $4.55M–$4.90M, and none of them combines a turnkey finish with a Pacific Avenue address a short walk from Tide Park. I've weighted the time-adjusted resale and the location most heavily.

Dashed line: most probable value, $4.90M. Gold band: reconciled range, $4.75M – $5.10M.

Comparable sales Tap a comparable for how it compares

The ceiling is real. The highest non-oceanfront sale for a home this size in the data set is $4.7M (410 N Acacia), and bluff-top homes across the street start around $6.2M. 364 Pacific won't cross into that tier at any finish level. Needs verification

The property

A permitted 2021 rebuild, five houses from Tide Park

ItemDetail
APN263-302-02-00
Owner of recordCasa Lenta LLC
Living area1,879 sq ft (county record)
Bedrooms / baths4 bedrooms / 3 baths
Lot3,500 sq ft (0.08 acre), zoned R-1
Built1967; full permitted remodel 2021
Flood zoneFEMA Zone X (minimal risk)
2025 assessed value / tax$4,032,590 / $43,700.68
PurchasedAugust 2021, $3,800,000
Current usePermitted vacation rental · 4.88 stars, 57 reviews
WhenScopeInvestment
2021
Prior owner, permitted		Down-to-the-studs remodel: all new systems, plumbing, electrical and roof; floor plan modifications; all new bathrooms; exterior enhancements~$650,000
2023
Kristie		Cosmetic upgrades, landscaping and outdoor living: hot tub, fire pit, outdoor kitchen~$300,000
Invested by Kristie: purchase + 2023 improvements~$4.1M

What buyers will weigh

  • Strengths: the Pacific Avenue address, the short walk to Tide Park and Fletcher Cove, new systems behind the walls, a turnkey finish and a proven rental track record.
  • Constraints: the smallest lot among the comps, no ocean view, and parking. The detached one-car garage sits on a very narrow drive that fits a compact car at best; there's one driveway space, and the rest is street parking on Pacific, typical for the neighborhood.
  • Positioning: the garage is a finished gear garage for bikes, boards and beach equipment, which is how it works best today.

Property details are from county records and the owner. Needs verification

The comparable set

Every sale west of the 101, north of Lomas Santa Fe

San Diego MLS, May 2020 to October 16, 2026. Tap a pin or a row for details.

Pin locations are approximate. Hollow pins are active listings. Red star: 364 Pacific.

Neighborhood value trend

Values compounded about 6.4% a year since 2021, then flattened in 2026

Non-oceanfront closed sales, pooled in two-year windows because only 4–7 such homes sell each year. Bluff-top homes excluded. Citywide reference: Zillow Home Value Index for Solana Beach, January 2026.

How the enclave is trading

YearSalesMedian daysSale / orig. ask
2026 YTD37193.6%
202583097.2%
202443896.4%
202366382.6%
202275100.0%
2021102194.6%

Three tiers, and where 364 sits

For forward planning I'm using 3% a year: about half the five-year pace, and above this flat past year. Prediction: future appreciation is speculation.

Market statistics are calculated from the MLS export. Needs verification

Option 1 · Keep 364 Pacific

Keeping it means vacation renting through a softer market, at under 3% a year

Annual line itemVacation rental · actual, Oct 2025 – Oct 2026Furnished lease · if a tenant is found at $15,500
Occupancy177 nights (48.5%) · $1,138 avg base rate12 months, 4% vacancy
Guest-paid rent and cleaning (before tax)$221,601$186,000
Owner payout after channel and payment fees$172,313—
Management–$30,225 (15% of base rate)–$11,160 (6%)
Reservation expenses / repairs and reserves–$11,629–$12,000
Vacancyin occupancy above–$7,440
Net before ownership costs$130,459$155,400
Ownership costs ($12,000 / month)–$144,000–$144,000
Net annual cash flow–$13,541+$11,400
The long-term lease isn't materializing. We've marketed the home as a furnished lease for about six weeks without a single viable tenant, even at $15,000–$16,000 a month. Finding one in the fourth or first quarter will be very challenging. Realistically, we keep vacation renting: minimal off-season revenue, with spikes around the holidays.

What keeping it earns

  • At 3% appreciation, about $147,000 a year in value, less the ~$13,500 rental shortfall: roughly 2.7% a year on $4.9 million.
  • In three years, the home is worth about $4.90M, $5.35M or $5.67M at 0%, 3% or 5% a year.
  • All capital gains stay deferred, and depreciation keeps running.

Risks

  • Rental market: vacation-rental revenue has declined over the last several years, and the off-season is getting longer.
  • Flat values: if appreciation stays flat, holding is the weakest path.
  • California rent law: if a lease does come together, AB 1482 rules can apply to LLC-owned homes unless an exemption notice is in the lease.

Vacation-rental figures are from the rental activity report for check-ins Oct 1, 2025 – Oct 16, 2026 (12.5 months). Needs verification

Option 3 · Pre-listing refresh

Replace only what truly needs replacing: a $75,000–$100,000 refresh

The heavy lifting was done in 2021. What buyers will notice first at this price point is the flooring, the fixtures and the curb appeal, so that's where the money goes.

The scope

  • Flooring: replace the luxury vinyl plank with higher-end European white oak throughout.
  • Plumbing fixtures: update faucets, shower fixtures and hardware to match the finish level buyers expect at $4.9M+.
  • Exterior: targeted landscaping enhancements for curb appeal and the outdoor living areas.
Budget: $75,000 – $100,000. Completed in early to mid-January, after the holiday guests, ahead of photography and the early-February launch.

Why not the full $300K–$500K program

BudgetAll-in*Value liftNet
$300,000$420,000+$325,000–$95,000
$400,000$552,000+$475,000–$77,000
$500,000$684,000+$625,000–$59,000
$500,000, strong market$684,000+$725,000+$41,000

*Adds 10% soft costs, a 10% contingency and $12,000 a month of carry with no rental income during 5–7 months of work. Value lift is a prediction.

Land, ocean views and square footage are what buyers pay a premium for on this street, and finishes can't add any of them on a 3,500 sq ft lot. Those dollars work much harder on the next project.

The next project · built around a $1 million profit

Buy at $5M, renovate for $1.5M, resell at $8M+

All-in cost
Profit after all costs
Return on total cost
Resale needed for $1M

All-in = purchase + 1.5% buying costs + renovation + carry at about 2% of the purchase price a year. Profit = resale less ~6% cost of sale, less all-in. At $8.0M a $5M + $1.5M project clears $1.0M after selling costs; with buying and carrying costs, the $1M line is about $8.25M.

What we're buying

  • Oceanfront, or oceanfront-adjacent with panoramic views. That's where the premium lives, and finishes can't create it.
  • Large lots with room for real lifestyle enhancements: added square footage, outdoor living, a true primary suite and functional parking.
  • Underwritten to $1M+ profit after all costs before we write an offer, measured against finished comps.

With the right asset, this model is very achievable. Exchange proceeds of about $4.6M from 364 Pacific cover roughly 70% of a $6.7M project.

The play already works here

410 N Acacia sold for $2,525,000 in August 2024, was renovated and expanded from 1,716 to 2,132 sq ft, and resold for $4,700,000 12 months later. At $1.2M–$1.4M of construction, consistent with that finish level, the gross profit was about $657K–$857K, or 16%–22% on total cost, before selling costs. That was on a non-oceanfront home at half your target price point. The buyers at 211 Ocean are making the same bet, with about $2M to expand on a double lot.

Holding period: permits and construction keep the replacement well over 12 months before any resale, consistent with your 1031 advisors' guidance.

Illustrative model; purchase price, budget, carry and resale value need verification against a specific property. 410 N Acacia construction cost is an estimate. Needs verification

Buying the replacement under current law

The 2025 tax law turns a value-add exchange into a tax shelter while you build

The One Big Beautiful Bill Act left 1031 exchanges intact and made several real estate benefits permanent.

BenefitWhat it doesEstimated value to youWatch-outs
1031 deferral on the 364 saleDefers federal and California capital gains tax, the 3.8% net investment income tax and depreciation recapture.~$185K+ on a ~$500K taxable gain (after selling costs) at a ~37% combined rate, plus recapture.Deferred, not forgiven. The replacement carries over your lower basis.
100% bonus depreciationPermanently restored for property acquired and placed in service after January 19, 2025, used property included. A cost segregation study can expense the short-life parts of the home and renovation in year one.Speculation: if 25%–35% of a $1.5M renovation is short-life, a $375K–$525K first-year deduction, worth ~$140K–$195K federally at 37%.Federal only; California doesn't conform. Starts once the finished home is placed in service as a rental.
Short-term rental treatmentAverage stays of seven days or less fall outside the passive-loss rules. With material participation, losses can offset other income.Makes the deduction usable against other income.Third-party management makes material participation harder to prove.
20% QBI deduction (Section 199A)Made permanent. Up to 20% off qualified rental income when the rental runs as a trade or business.20% of net rental income once stabilized.Needs the 250-hour safe harbor or trade-or-business facts.
Estate exemption and step-up$15M per person ($30M per couple), permanent from January 1, 2026. Heirs receive a stepped-up basis at death.A chain of exchanges can end with the deferred gain eliminated for heirs.Future legislation can change these rules.
What it costs: the replacement is reassessed at its purchase price under Prop 13; a 1031 does not carry over your current assessed value. A replacement outside California also triggers the state's annual clawback filing.

I'm not a CPA or tax attorney. All tax items need verification with your CPA and qualified intermediary.

Recommendation and next steps

Refresh in January, list in February, acquire the next project before summer

Now – December · Set upEngage a qualified intermediary, bid the refresh and start an off-market search for oceanfront and view properties.
Early – mid January · Refresh$75K–$100K after the holiday guests: European white oak floors, plumbing fixtures, landscaping.
Late January · Capture itStaging, photography and video. Renew the rental permit by January 31 as a backup.
Early February · LaunchList at $4,995,000 and reach the buyers who sat out 2026 and want a home for summer 2027.
Late March – early April · CloseThe 45-day identification window runs to mid-May; the 180-day close falls around early October.
May – June · AcquireClose on the next project before the prime summer selling season kicks off.

My recommendation

List 364 Pacific in early February at $4,995,000 after a targeted $75K–$100K refresh. That locks in roughly a 20% gross return on what you've invested. Close by late March or early April, then exchange into an oceanfront or view property on a large lot, acquired before the summer selling season and underwritten to $1 million or more in profit.

Until we list, we keep vacation renting through the holidays to cover as much of the carry as the off-season allows.

What I need from you

  • The go-ahead on the refresh scope and budget, so bids can start now.
  • Your target price range and areas for the next project, so the search starts now.
  • Your CPA's read on bonus depreciation, the short-term rental rules and depreciation recapture on 364.
  • The go-ahead to line up a qualified intermediary before we list.
Appendix

Full comparable set

Price = sold price for sold records, current list price for active listings. Source: San Diego MLS, May 2020 – Oct 16, 2026. All data, including measurements, is obtained from various sources and has not been verified by broker or MLS.